Ameritrade, TD Waterhouse In Talks About A Possible Merger; Industry Is Consolidating Fast; E-Trade/TD almost merged last year; ET sought merger with Ameritrade last month.(INTERNET & TECHNOLOGY)

Byline: BRIAN DEAGON

Ameritrade and TD Waterhouse USA said Tuesday the two online stock-trading firms are discussing a "potential transaction" that analysts say could lead to a $2.5 billion-$4 billion merger.

Such speculation has hovered in the industry since last year, say analysts, when merger talks between E-Trade and TD Waterhouse collapsed over control issues.

Then, three weeks ago, E-Trade made a $6 billion offer to acquire Ameritrade. E-Trade made the offer in a letter to Ameritrade's board, but directors said the company wasn't for sale.

An E-Trade spokeswoman said the company had no comment on the Ameritrade/TD Waterhouse …